Patents, Royalties, and Publicly Funded Stem Cell Research

The debate over the public funding of human embryonic stem cell research typically covers the familiar ground of the moral status of the human embryo and is, in many ways, a rehash of the abortion debate. When the discussion moves on beyond that point, the issues of cloning, genetic engineering, and the slippery slope arise, much of which takes place with the familiar battle lines already drawn, or at least the situation is portrayed that way among the popular media. These issues are real, and the center on the research itself and the question of the scientific imperative: Should science (and, as a corollary, technology) be subject to any restraints? Or should anything that can be done actually be done?

One of the lesser known issues comes directly from the discussion over the public funding of embryonic stem cell research and related technologies, whether on a federal or state level. The question of intellectual property benefits is finally seeing the light of day in California and New Jersey, where human embryonic stem cell research is publicly funded on a state-wide level. In both of these states, the researchers who receive state grants retain all of the royalties from any patents they obtain based on that research. In other words, a scientist could apply for a grant, receive tax payer money for the research, discover a cure for some dreaded disease using this money, become a billionaire, and not be required to give anything back to the state to fund new research. This raises serious questions about the biotechnology industry's real interest in public funding measures, whether the industry is serious about providing cures for patients or using public money to support potentially lucrative research that venture capitalists would not touch.

California's Proposition 71 was promoted to taxpayers based on the promise that they would receive approximately $1 billion in royalties in return, though the actuality of this promise is now in serious doubt, as the 1RS restricts payments of royalties on certain types of bonds that fund the research. Likewise, it is doubtful that the promise that any therapies found through publicly funded stem cell research would be returned on a free or low-cost basis to Californians who are poor or lack health insurance, as this could violate civil rights legislation. In New Jersey, there is no current provision to return any royalties from publicly funded research back to taxpayers; a bill, S567, has been introduced in two consecutive sessions and has passed the Senate unanimously but failed to pass in the House before the end of the legislative session.
The fact that human embryonic stem cell lines are patentable under United States patent law makes them potentially lucrative for biotechnology researchers and makes the question of the return of royalties in exchange for public funding even more pressing. The question of whether biotechnology companies and the researchers they support have the public interest in mind or whether this type of public funding is merely a cover for corporate welfare. Acting Governor Codey has proposed that 5% of all royalties received from state grants for stem cell research be returned to fund further research, but this is only a proposal and not the way that current funding is being provided. The New Jersey Commission on Science and Technology, the arm of the New Jersey government charged with overseeing the public Stem Cell Institute, has as its mission statement:

To encourage economic development and job growth in New Jersey by:* promoting strong ties between industry and universities in order to accelerate commercialization of technology
* supporting entrepreneurial technology businesses in areas of strategic importance to the state and
* strengthening research collaborations among universities to create new potential for increased federal funding and private investment.

Nothing in its mission includes working for the public benefit or even medical advance; it is entirely devoted to serving the business sector's interests and is a telling sign of the real rationale behind public funding schemes. The sad irony is that the biotechnology has most vigorously promoted these efforts among patient advocacy groups, holding out the promise of cures to lure them into supporting public funding of their businesses, only to turn around and demand high prices for their patented services.

In addition to the public funding questions, the issue of patents on embryonic stem cell lines remains, both within the United States and across the world as nations seek to standardize their regulations regarding the patenting of genes and forms of human life; they must be dealt with separately. But perhaps on the question of who benefits from public funding of human embryonic stem cell research, some common ground can be found between those who take differing views of the human embryo. All parties can support patients who are desperate for cures and who need the federal government and the states to make the best decisions for them in funding medical research, not simply throwing dollars at biotechnology companies with no promise of return, but to seek real benefit for those who need it most.